The Rise & Fall of the Japanese Semiconductor Industry, 1970 – 2000

Powerful Essays
The Rise & Fall of the Japanese Semiconductor Industry, 1970 – 2000


The semiconductor was the created with the innovation of transistor by

Bell Corporation. The industry was driven by the of great US

electronic giants such as general Electronic, Texas Instruments and

others. These US giants conquered most of the world market sharers.

However in the ever-changing world economy the market always moves

here to there. Nothing was different in the case of semiconductor

industry. With the span of time US gradually lost control of the

semiconductor market shares and Japan captured the industry.

Nevertheless, it was only a matter of period to misplace the market

share of semiconductor business by Japan. The time frame of

semiconductor business started immediately after WWII and running even


In a way the changes took place and how the shape of distribution of

market has been changed was grounded by all time great market and

economic mechanisms. Some argues those government policies and

economic mechanisms in an optimistic viewpoint some obviously in sees

in pessimistic view. However, this is known to all that the policies

that have been part of the cause have made those countries the world’s

leader in electronic production as well as the economic super power of

the planet.

Although US is the originator and architect of the semiconductor

technology, especially was outstanding in DRAM (Digital random Access

Memory) assembly, US actually struggled to stay in the competition in

long run because of the excellent Japanese policy about the foreign

direct investment in Japan. Many may argue with various benefits of

green field investment that it is good for the host country but Japan

never encouraged Greenfield investment by US or by any other countries

especially in semiconductor industry. Forget about the encouragement,

Japan had a great barrier and restrictions on this semiconductor

industry. The policy of Japanese government, Ministry of International

Trade and Industry (MITI), deliberately made US firms to go for joint

adventure with the Japanese companies. Initially US firms were making

profit but with the help of Japanese government policy Japanese firms

took over 80% of global market share of chip making business

especially semiconductor industry where US was the innovator of the


Afterward tremendous...

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...gained DRAM market share in Japan. Even in 1988 Samsung never produced

DRAM but in 1994 got more than 12 percent of market share lot ahead of

Japanese giants like Mitsubishi or NEC. The investment on plants of

digital chip making was lot higher by the Korean and Taiwanese company

compared than Japanese or US. South Korean firms invested 55 percent

of the revenue from the semiconductor revenue whereas Japanese did

only 15 percent. The aggressive move from South Korea and Taiwan made

them able to grasp the market share of Japan. Still now from 1991

Japan is losing its market share in semiconductor business.

Also, The U.S. comeback in chips was due primarily to rapid growth in

the market for microprocessors, the chips that act as the "brains" of

personal computers. That market is dominated by Intel & Motorola.

Intel's semiconductor sales increased from $1 billion in 1986 to about

$4 billion in 1991, a gain that by itself is responsible for the U.S.

share of the world market being about 5% higher than it otherwise

would be. The Japanese attempt to develop its own microprocessor

design standard – “TRON” failed in large part because there was no

software to support it.
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